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Obama meets with governors on economy

(AP) - President-elect Barack Obama pledged quick
work Tuesday on an economic recovery plan to include tax cuts and
increased federal spending, and told the nation's governors he
wants their advice in designing a package to help their hard-hit
states.

"We intend to put tax cuts into the pockets of hard-pressed
middle class families in your states. And we intend ... to start
making a down payment on the critical investments that are going to
be necessary to sustain long-term economic growth as well as pull
us out of the current slump," Obama said as he sat down with
governors, nearly all of whom are struggling with budget deficits
at home as a result of the recession.

Vice President-elect Joe Biden told the same group he hopes they
will not criticize the incoming administration for raising the
deficit as it tries to help them.

Obama meets with governorsJIM WATSON/AFP/Getty Images

"I know none of you would do
that," he said jokingly. Many states have constitutions that
prohibit deficit spending.

"Forty-one of the states that are represented here are likely
to face budget shortfalls this year or next, forcing you to choose
between reining in spending and raising taxes," Obama said. "Jobs
are being cut. Programs for the needy are at risk. Libraries are
being closed. Historic sites are being closed."

The recession and the accompanying increase in joblessness
translate into higher health care costs for the poor, greater use
of food stamps and added strain on welfare programs, and the
governors are seeking help in coping.

They have asked for at least $40 billion to help pay for health
care for the poor and disabled and perhaps $136 billion more in
infrastructure projects like road and bridge repairs in the
legislation, which Democrats hope to have ready for Obama's
signature as soon as he takes office on Jan. 20.

Obama has said he will make an economic stimulus his top
priority, and his aides and congressional leaders have been
discussing the outlines of a measure that could exceed $500 billion
over two years. The president-elect has said his goal is to secure
2.5 million jobs.

“Forty-one of the states that are represented here are likely
to face budget shortfalls this year or next, forcing you to choose
between reining in spending and raising taxes.”

President-elect Barack Obama

In his brief remarks, Obama pledged a partnership with the
governors, Republicans and Democrats alike.

"As president, I'm not
simply asking the nation's governors to help implement our economic
plan," he said. "I'm going to be interested in you helping to
draft and shape that economic plan."

He made a point of promising Republican governors "the hand of
friendship, the same commitment to partnership as a do my
Democratic colleagues."

Obama spoke to a bipartisan group of state chief executives at
historic Congress Hall that included former and possibly future
political rivals. Among those in attendance were Republicans Govs.
Bobby Jindal of Louisiana and Sarah Palin of Alaska, the GOP vice
presidential nominee in this year's campaign.

Speaking to reporters after the meeting, Palin said she was
"optimistic" about Obama's bipartisan outreach. She also praised
him for inviting governors into his Cabinet.

"On the campaign trail I tried to convince a majority of voters
that governors knew best. Obviously that didn't work, and I'm here
and V.P.-elect Biden is there," she said of her former adversary.

Republican and Democratic governors sat at desks in the hall,
with no separation by party, and gave Obama and Biden a standing
ovation.

Biden singled out Palin for thanks and said his former rival's
presence there is a sign that both parties are now confronting
problems together.

"Maybe walk outside with me later and say hello
to me," he said to laughter from the crowd.

"We're going to be talking about what the elements of an
economic stimulus plan will be," said Massachusetts Gov. Deval
Patrick, a Democrat.

Pennsylvania Gov. Ed Rendell, a Democrat who chairs the National
Governors Association, told reporters there are upward of $136
billion in infrastructure projects that are "ready to go,"
chiefly road and bridge repair projects that can get started
especially quickly. Water and sewer projects and school repairs are
other needs.

"We are not here asking for money for governors. If we're
asking for any money at all, it's for the citizens of our states,"
Rendell said.

Rendell and NGA Vice-Chairman Jim Douglas, R-Vt., met Monday
with House Speaker Nancy Pelosi, D-Calif., who said Democrats will
work to have the economic stimulus measure ready for Obama's
signature as soon as he takes office Jan. 20.

It's expected to blend funding for infrastructure projects and
Medicaid aid to the states with tax cuts, a temporary increase in
food stamp payments, as well as investments in renewable energy
projects and other "green jobs" initiatives.

The NGA has proposed
$40 billion over two years to temporarily increase the federal
government's contribution to the Medicaid program for the poor and
disabled.